Mittal says EU emission cap will limit growth

Arcelor Mittal, the world's biggest steel company, has warned that a blitz of planned investments in Europe to meet booming demand is threatened by strict new EU caps on greenhouse gas emissions to combat climate change.

At the opening of the group's new $381m (£188m) hot strip mill in Krakow, Michel Wurth, board member in charge of flat products in Europe, said: "By cutting the allocation of CO2 quotas, the European commission will limit our growth possibilities in Europe and encourage a surge of imports from countries unaffected by such controls."

Brussels has cut Poland's allocation by 30%, prompting Arcelor Mittal to join forces with the Warsaw authorities to demand an easing of restrictions. Before last year's merger with Mittal, Arcelor had already lodged legal action against the EU's flagship emissions trading scheme (ETS) at the European Court of Justice.

Vijay Bhatnagar, an executive vice-president in charge of eastern European operations, said growth in the region would be between 5% and 6% a year and steel consumption would increase by 10% or more as manufacturers invested heavily in new car plants and switched to eco-friendly domestic appliances.

Mr Wurth, chairman of the supervisory board at Arcelor Mittal Poland, which claims to have invested €850m (£570m) in the country since acquiring four bankrupt plants in 2004, said the group planned to make further investments in Poland, the Czech Republic, Romania and eastern Germany. It is also planning "de-bottlenecking" investments in Belgium, France, Luxembourg and Spain.

But he said the EU's emissions-trading scheme threatened to curtail these. "We consider that this scheme has perverse consequences, putting a brake on growth, and there are no excess quotas we can buy to participate fully in the growth of the market."

Polish directors claim the group has cut emissions by 25% in the past three years but admit that the local operations have a considerable way to go to meet commitments to reach EU norms by 2010-12. Mr Wurth said the group had cut overall emissions in Europe by 20% since 1990.

"Steel today is environmentally friendly and can be endlessly recycled," he said. "We can now dramatically reduce the weight of steel in its industrial applications so that, if one were to build the Eiffel Tower with current products and technology, it would weigh 25% of what it actually does - and that drastically cuts CO2. It will not be easy to transfer [CO2] quotas from one country to another so we need to find agreements with the governments in different countries so we can grow."

The commission has launched a review of the ETS, proposing that all quotas be auctioned rather than the current scheme that allows more than 90% of certificates to be given free - depressing the price of carbon and handing profits to producers.

About this article

Mittal says EU emission cap will limit growth

This article was published on
the Guardian website
at 18.51 EDT on Monday 30 July 2007.
It was last modified at 18.51 EDT on Saturday 4 August 2007.
It was first published at 18.51 EDT on Saturday 4 August 2007.